Budgeting, Money Mindset, Personal Finance

How to Live on 80% of Your Income

When it comes to budgeting your money, it can be confusing to know where to start. How much should you be spending – and what should you be spending on? How much is ‘normal’ to spend on everything in your life, from your rent or mortgage, your car, entertainment and eating out?

If you have no idea where to start, or would just like to refresh your money mindset and give your budget a makeover, here’s a super simple budgeting rule: the 50/30/20 rule.

If you have a 50/30/20 budget, that means that:

50% of your net income goes towards needs;

30% of your net income goes towards wants; and

20% of your net income goes towards your financial goals, like paying off debt or buffing up your savings.

Let’s say that I bring home $1500 every fortnight. Ideally, my budget would look like this:

$750 (50%) for my needs;

$450 (30%) for my wants; and

$300 (20%) for my financial goals

So what does this mean? Because 50% goes towards needs and 30% goes towards wants, that means that 80% of your budget is allocated, leaving you with 20% to grow in your personal finance goals. Of course, if you can increase that 20% to 30%, 40% or more, even better! In an ideal world, right?

What it means for you is that you need to learn to live on 80% of your income. Here’s how I did it, and you can too!

1. Know your net income.

A super easy first step! Your net income is not your salary, or gross income – like how you would normally say that someone’s income is “$60k”. It’s what you take home. You don’t need to calculate this; simply check your bank account for your weekly, fortnightly or monthly pay.

2. Work out 80% of your net income.

Sticking with the example of $1500 per fortnight, 80% of this means that ideally, you’d keep all your needs and wants within $1200 per fortnight. Or:

For $1400, $1120.

For $1200, $960.

For $1000, $800.

You get the idea.

If your needs & wants are under 80%, congrats! You do not need this blog. However, if your needs & wants are over 80%, my next step should help you out..

3. Reduce & simplify your needs & wants.

So your needs & wants are over 80% of your income. Let’s see where your money is going and where we can reduce and simplify.

a) Write down what your needs & wants are. For me, my list looks like this:


Food out

b) Here is the time to question everything. Be ruthless with each expense! Ask yourself: “What can I do without, or get for less?”

Mortgage – can I refinance at a lower interest rate?

Rent – can I move somewhere with cheaper rent?

Insurances – can I switch to a policy with lower premiums (or increase excess)?

Power/Water/Internet – can I switch to a cheaper company?

Food – how can I eat nutritious food for less, or get more meals out of my food?

Clothes – how can I buy less clothes, or quality clothes that last longer?

Books – how can I spend less on books, or less often – perhaps by using my local library?

Gym – how can I work out and be healthy inexpensively, ie. switching gyms, going for walks in nature?

4. Do your research and save!

Now that you know where your money is going, it’s easy to make change happen. Spend 30 minutes researching all your options, but remember: don’t just look at the price, but the value you are getting. For example, another insurance company may provide a lower premium, but are you still just as protected and covered?

Here are all the things I have personally saved on:

My mortgage, by researching each bank’s interest rates

My insurances, by comparing policies, premiums and excesses

My phone, by reducing my monthly data

Food – by making my food last longer (essentially halving my food portions)

Clothes – by buying new clothes less often, but at a much higher quality

Books – by going to the library and borrowing new books I want, instead of buying them straight away

Food out – by eating out less, and eating less meat when I do. Vegetarian & vegan options are just as delicious!

Subscriptions – by cancelling my LinkedIn Premium, Youtube Red, and Skillshare, and sharing Spotify Premium with my partner

Gym – by selling my $49/fortnight gym membership and getting a $28/fortnight gym membership!

Once you shop around, you’ll realise there are so many options out there; so many possibilities and ways to reduce your expenses. Simply repeat until your wants & needs are within that target of 80% of your income.

5. Work out your financial goals.

Success! You’re now able to live on 80% of your income, and have freed up 20% for your financial goals. What are you going to do with all that money?!

Here are some ideas:

Pay off your debt. Challenge yourself to pay as much as you can above your minimum monthly payment.

Build your emergency fund – at least 3 months of your salary.

Buff up your savings.

Donate to a charity, organisation or political party you are passionate about.

Save for a big purchase, like a new car, laptop or holiday instead of borrowing from a credit card or personal loan.

Save towards your 10% or 20% house deposit!

So there you go – how to live on 80% of your income. I hope this has been helpful and informative and inspired you to refresh your budget.

Good luck!




7 thoughts on “How to Live on 80% of Your Income

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